BE Blogs: Are marketers ready for the desi luxury shopper?

The world’s second tallest residential building currently under construction is an unrivalled example of the meaning and expression of luxury in a so-called emerging market. The 117 storey-high World One Tower in Mumbai will be home to India’s wealthy elite, a fitting extravagant bastion for India’s super-affluent that remain an important element in growing India’s luxury market. However, a real game changer can be felt within India’s consuming classes. Beyond the super-rich, the emergence of a buoyant upper middle-class consumer society, itself based on a steadily growing middle class is gradually transforming consumption patterns.

Rise of the ‘aspirational rich’

India has often been economically referred to as ‘The Next China,’ namely a country with a huge population base with a steadily growing income-based class structure, whose increasing wealth and associated consumer aspirations are marked by a robust, rising trend in conspicuous consumption. This phenomenon is no less pronounced in India today. The expansion of contemporary India’s aspirational middle-class highlights not only growing affluence levels, but also their escalating aspirational passions.

The democratization of luxury consumption globally has certainly created new growth opportunities for international luxury brands in India as well. However, it has also changed the dynamics of the ‘codes of luxury consumption.’ Research detailed in our latest book, ‘Luxury Brands in China and India’ sets out to decrypt these aspirational rich and uncover two broad consumer groups in India that are either driven by the aspiration to create or to recreate social boundaries.

Sharing the social status

The aspiration to create social boundaries suggests that this new class of luxury consumer views prestige brands as reflecting their desired social status. This may appear at a first glance to be an outdated attitude towards the acquisition of luxury brands, but in fact it reflects the need for Indian consumers to feel empowered; a strong and broadly shared consumer sentiment. The motive is to be conspicuous in their spending in order to access a higher level of the social hierarchy.

Anecdotal evidence suggests that the easily recognizable Burberry check pattern is one popular brand signal amongst this group of consumers in India. The use of social media and an appropriately taken ‘selfie’ has become an important vehicle to signal this newly ‘acquired’ social status. This also implies that status-sensitive consumers are primarily influenced by the perceptions and opinions of their friends, colleagues and, at times, family members. Societal validation and group norms should not be underestimated. It is here that the influence of Bollywood celebrities can play a critical role, particularly amongst younger and lower income consumers.

Battle of the new age v/s old age luxury

The desire for status is still unquestionably relevant, but alongside is the inevitable phenomenon of the aspiration to recreate social boundaries by reactionaries that perceive social intrusions. When interpreted within a wider context, this phenomenon has created an interesting scenario. Luxury consumers who see themselves as being ‘superior in taste’ are searching for new or niche luxury brands, including local luxury and designer brands, in order to differentiate themselves from less sophisticated luxury consumers.

Our research confirms that Chinese consumers, who economically are at a more advanced stage versus their Indian counterparts, place the value of Louis Vuitton as a brand that is rather suited for ‘other people’ as it confers a more democratic positioning in the luxury marketplace. Consumers avoid choosing brands that have associations with out-group references. Somewhat surprisingly, this is also evident in India to a lesser extent.

Luxury’s new social order

The gradual erosion of caste boundaries in urban India is giving way to a ‘new social order.’ Materialism has elevated the status of members of lower ranked castes. It is this new social phenomenon that is influencing consumers to signal their distance relative to ‘lower ranked’ consumers. The essence of luxury in India is still very much embedded in tradition and celebrated in the era of royal patronage, but codes of differentiation might also include a foreign education, including spoken English, but also the discreet, yet at the same time conspicuous placement of a Montblanc pen in a shirt pocket.

Indeed, the role of the selfie for this segment of consumers is less about ‘having’ and more about ‘being,’ and correspondingly selfies are uploaded that depict a luxury lifestyle, whether it is dining in a fine restaurant or visiting an attractive foreign destination.

New cultural practices and rituals are also re-creating and re-defining social boundaries.

The positioning dilemma

The aspirational rich create a dilemma for many international luxury brands and managing their positioning. International luxury brands in India face myriad dilemmas of accessing new consumers, capitalizing on new distribution and communication channels, while at the same time maintaining the overall exclusivity of the brand itself. Luxury brands face an exceptionally challenging task in managing the trade-off between accessibility and exclusivity. The brand’s positioning will undeniably determine to what extent the notion of ‘luxuriousness’ can be stretched.

Armani’s multi-level brand strategy allows maximum coverage for the brand and broad customer appeal. In India, it has opened 11 Armani Jeans stores, 4 Emporio Armani stores and 1 Giorgio Armani store, which suggests a stronger market presence skewed to younger and lower income consumers, who theoretically will eventually trade up between the various brand levels. Democratic exclusivity is clearly an oxymoron that international luxury brands must somehow make sense of, while simultaneously setting themselves apart from home-grown luxury brand alternatives.

Glyn Atwal is Associate Professor of Marketing at Burgundy School of Business, France and Douglas Bryson is Professor (Titulaire 1) at Rennes School of Business, France. Views expressed are personal.